Russia, U.S. Trade Barbs Over Arms Deal To Syria; Aung San Suu Kyi Will Receive Nobel Peace Prize 20 Years Late

Aired June 13, 2012 - 16:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JONATHAN MANN, HOST: Tonight on Connect the World the dispute over arms sales to Syria. Russia's foreign minister is up in arms over what his American counterpart has to say. We'll show you who is providing Syria's hardware and just what the government is getting.

ANNOUNCER: Live from CNN Center, this is Connect the World.

MANN: Also tonight, excitement builds as Aung San Suu Kyi comes to Europe. Topping her to-do list: pick up her Nobel prize 20 years late.

And giving it a royal good throw. She may be a princess, but she's not afraid to get stuck in.

Thanks for joining us. I'm Jonathan Mann. We begin with Russia and the United States in a war of words over arms shipments to Syria. It all started yesterday when U.S. Secretary of State Hillary Clinton accused Russia of sending attack helicopters to the Syrian regime. She said that would escalate the conflict dramatically, but as Russia's foreign minister is firing back with this statement at a news conference in Tehran referring to the U.S. government.

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SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): They are providing arms and weapons to the Syrian opposition that can be used in fighting against the Damascus government.

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MANN: Russia's foreign ministry later clarified that remark. It says Lavrov was mistranslated. And what he really said was that the U.S. is supplying arms in the region. Still it prompted an indignant response today from Washington. Pentagon correspondent Chris Lawrence joins us now with more. Chris, let's not lose sight of the fact that there's a tragedy unfolding in Syria itself. But now there's this spat. Walk us through what the two sides are saying?

CHRIS LAWRENCE, CNN CORRESPONDENT: Yeah. Basically, Jonathan, at this point the accusations between the United States and Russia are flying fast and furious. The United States accusing Russia of continuing to ship arms to Syria saying it's laughable to think that only those arms would be used for self defense, that they are being used to attack the Syrian people while at the same time Russia is now accusing the United States of arming the rebels, calling the United States in essence somewhat hypocritical.

Secretary of State Hillary Clinton pushed back hard against that accusation today.

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HILLARY CLINTON, U.S. SECRETARY OF STATE: I would emphasize that the United States has provided no military support to the Syrian opposition, none. All of our support has been medical and humanitarian to help relieve the suffering of the Syrian people, a total of $52 million so far. We have also provided non-lethal support to the opposition including things like communications gear.

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LAWRENCE: And as the accusations fly the Syrian people continue, continue Jonathan, to die.

MANN: Chris, I want to ask you about how the U.S. is contributing to this on the ground in a moment, but let's have a look at the top four countries that have supplied major weapons systems over the past decade.

Now North Korea, let's start with that, responsible for just 3 percent. And nothing at all since 2004. Iran, just 9 percent, most of that in the past few years. Perhaps surprisingly Belarus at 16 percent, that's primary from a 2008 aircraft deal. But take a look at Russia, look at that, that jumps out at nearly three-fourths of Syria's major weapons imports come from Russia. And in the past three years it's been more than 90 percent.

So what kind of weapons are we talking about? Well, according to the Stockholm International Peace Research institute, the vast majority of imports are missiles and air defense systems, that includes an estimated 36 Russian Panzer mobile surface to air missile systems and overall 475 missiles, that's a critical point because it undermines any kind of western backed no-fly zone though it doesn't contribute much to the house to house crackdown the killings, these atrocities that we have seen in recent weeks.

Syria also received an order of 54 ships in 2006 from Russia stationed at three major naval bases. Russia has a naval base of its own at the Mediterranean port of Tartus. It's the only one in the region. Again, not entirely related to the worst of the repression that we're seeing.

Finally, Syria's largest outstanding military order with Russia, over 25 MIG fighters are soon to be delivered along with anti-ship missiles and guided bombs.

Chris Lawrence at the Pentagon, the Russian exports to Syria are big and important and expensive, but we're talking about, what, jet fighters, we're talking about ships, these are not the weapons that are leaving children dead with their throats slit. I'm wondering how much of this is outrage over a big existing old and essentially irrelevant commercial relationship?

LAWRENCE: You make a good point, Jonathan. I think the United States government points to a trend. They say that when you drill down on those numbers from about 2003 to 2006 the Russians sold Syria about $2 billion worth of weapons. From 2007 through 2010, that more than doubled to nearly $5 billion worth of weapons. So they say Russian involvement has been increasing and most importantly has continued past this crackdown. So as this crackdown is going on.

But, there are many who accuse the United States of hypocrisy, because the same vendor that's supplying the Syrian regime, NATO is also buying other transport helicopters from that same vendor to equip the Afghan forces. And complicating all of this is the fact that the United States is very dependent on Russia and a lot of those other former Soviet states like Kyrgyzstan and a lot of those areas in that region to run the northern distribution network. In other words, ever since Pakistan closed its borders to the United States.

Most of the food, medicine, non-weapons supplies that have to get into Afghanistan go through Russia, go through these states. So the United States is walking a very fine line here, because they are still very dependent on Russia and some of these other countries to make sure that the war effort in Afghanistan is funded.

MANN: Chris Lawrence at the Pentagon, this is a lot more complicated than it looks. Thanks very much.

One thing we do know, the weapons are still in use. Heavy firepower helping Syrian troops retake control of a rebel area today. They overran the Sunni town of al Haffa after eight straight days of shelling. Rebels say they retreated to spare civilian lives.

UN observers tried to reach the town for days after activists warned a massacre could be imminent. The UN released some video today showing damage to the monitors' car as they came under fire as they approached al Haffa on Tuesday.

One global activist group says it's clear that Russian arms sales are aiding the regime's violent crackdown, so it's calling on governments to boycott Russia's biggest arms dealer. Ricken Patel is the executive director of Avaaz joining us now from New York. Thanks so much for being with us.

Let me ask you first of all, the United States says Russia is sending attack helicopters. Russia is denying it flat out. What kind of information do you have about what Russia's actually doing that's contributing to the crackdown?

RICKEN PATEL, EXECUTIVE DIRECTOR, AVAAZ: We don't about the attack helicopters, but we do -- we have seen a very clear pattern of very suspicious ships, at least four ships traveling from St. Petersburg to the Syrian coast. And we know in at least one case Bloomberg has a source reporting that there were small arms on board that ship. And in other cases there's a lot of evidence to suggest -- the merchants won't release the manifest. They try and hide their trajectory. They change their destinations mid-course. So they're trying to hide what's going on in that shipping route. That's number one.

Number two, senior military defectors from the Syrian regime are telling us that Russia has maintained a military presence on the ground in Damascus advising training, equipping, repairing the military equipment that they do send. And that this includes repair that upgrades to tanks, tanks that have been clearly used to aid in the crackdown.

So it seems that Russia is not being honest with us, that they are clearly aiding and abetting the crackdown.

MANN: So what specifically are you hoping for when you call for a boycott? I mean, the arms industry doesn't tend to be moved much by appeals of conscience.

PATEL: Well, we're hoping our governments were moved by it, because the truth is that we are buying arms from Russia right now, our government. The United States, India are two of the biggest buyers of arms from Russia's export company. And just one military deal, the transport helicopter deal that you mentioned to Afghanistan is worth all of Russia's military trade with Syria of last year. It's a billion dollars worth. And so if we say, if our governments say that they're not going to use our taxpayer money to buy Russian arms than Russia might think twice about selling those arms to Syria.

MANN: So let me just ask you, is it pious and well meaning, but unlikely? I mean, Afghanistan and the future of Afghanistan is also a very, very big concern to the U.S. government.

PATEL: I actually think there are alternative suppliers of this kind of military equipment. And I think the U.S. government is a possibility on this front. The Indian government is the second largest buyer of Russian military weapons in the supply of -- I think it's going to be a harder fight. But we've seen over and over again when citizens come together. And we've had 500,000 citizens sign this petition.

You can move government, that democracy can work.

MANN: Let me jump in and ask you a question about democracies and others are doing for the Syrian opposition, because this is a point that critics make that there are weapons moving into Syria funded at the very least, if not purchased outright by the governments of Saudi Arabia and Qatar. And essentially the United States either oversees it or turns a blind eye. Is that true too? Is Avaaz being a little hypocritical, because its friends are arming the Syrian opposition.

PATEL: Yeah, I think there is evidence that Saudi and the Qataris are funneling weapons through Turkey to the opposition. I think we have to be careful -- and that the U.S. is engaged in non-lethal support as they say.

I think we have to be careful about drawing a moral equivalence here and just make sure that we see the context that the Syrian people have struggled for 16, 17, 18 months now in non-violent resistance...

MANN: The moral equivalent -- I'm going to interrupt you on that. That moral equivalence doesn't discount the possibility of honesty. We can say we back the Syrian opposition and we're sending them guns, that doesn't mean necessarily that we're making the moral equivalent to the government, it just means we're telling the truth.

PATEL: Yeah. I think absolutely we should tell the truth about it. But I don't think the U.S. government is doing that, it's other governments. But even more worryingly, it's not governments doing that, it's Islamist groups that initially were the ones to send the real -- the weapons in initially. And I think that's very dangerous, because if they're the only ones offering the Syrian people hope, they will change the character of this conflict into the kind of sectarian war that everybody fears.

MANN: And that may be what we're seeing in fact. Ricken Patel of Avaaz. Thanks so much for talking with us.

PATEL: Thanks so much.

MANN: Still to come tonight, drug money and race horses: the tales on the Mexican cartel alleged to have infiltrated one of America's elite businesses.

And as four teams battle it out in Euro 2012's group of death. We'll cross to Poland to find out who is still alive. All that and much more when Connect the World continues.

A series of bombs have killed at least 75 people and wounded scores more in Iraq. 10 separate locations were hit in the deadliest day the country has seen since January. The attacks mainly targeted Shia Muslims on their way to a religious shrine in Baghdad. The violence sparking fears of an escalation in sectarian tensions.

Here's a look now at some other stories connecting our world tonight. The CEO of JPMorgan has apologized for the bank's $2 billion loss on high risk trades. During a two hour hearing before the U.S. Senate banking committee Jamie Dimon said he couldn't publicly defend the disastrous trades.

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JAMIE DIMON, CEO JPMORGAN: This portfolio morphed into something that rather than protect the firm created new and potentially larger risks. As a result we've let a lot of people down. And we are very sorry for it.

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MANN: Dimon also said the trades would have been very hard -- that's his phrase -- for the regulators to catch.

Rebekah Brooks, the former head of News International and a top aid to Rupert Murdoch has briefly appeared in court in London over her role in Britain's phone hacking scandal. Brooks is the former editor of two Murdoch papers, the Sun and the News of the World. She's accused of conspiracy to pervert the court of justice by hiding evidence from police.

Prosecutors at the International Criminal Court are seeking a 30 years jail sentence for Congolese warlord Thomas Lubanga, the former militia commander was convicted of war crimes at The Hague based court in March. He was found guilty of abducting children as young as 11 to use as soldiers in his rebel army. Lubanga protested his innocence at Wednesday's hearing.

A military court in Tunisia meantime, sentenced former president Zine El Abidine Ben Ali to 20 years in prison for incitement to murder. The judgment was handed down in his absence. He's currently living in Saudi Arabia. Ben Ali was ousted in January of 2011 after widespread protests.

We're going to take a short break. When we come back it has been 24 years now Myanmar's pro-democracy leader is heading to Europe for an historic and very personal trip.

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MANN: You're watching Connect the World live. I'm Jonathan Mann.

A United Nations envoy has arrived in Myanmar's strife torn state of Rakhine where escalating violence between Muslims and Buddhists have left more than 20 people dead. CNN's Paula Hancocks has the story.

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PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Bangladeshi residents point to a boat they say carried Muslims escaping neighboring Myanmar, an increasing number have been fleeing recent violence in the western Rakhine state. But Bangladeshi security forces are sending them back.

"The situation is unexplainable," one border says. "Yesterday they told us please kill us and throw our bodies into the river, but don't send us back."

Betan Ali (ph) has been given shelter by some Bangladeshi villagers and spoke with ongoing sectarian violence between the Rohingya Muslim minority and Buddhists and western Myanmar.

"They killed three, four people in front of me," he says. "I got scared and thought they might kill me. So I decided to come to Bangladesh as it's a Muslim country in the hope they will give us shelter."

Hundreds of homes have been torched in Rakhine state over recent days with deaths and injuries on both sides of the conflict.

Clashes erupted after police detained three Muslim men for the alleged rape and killing of a Buddhist woman late last month, an apparent revenge attack then led to the deaths of 10 Muslim men on a bus and a cycle of violence is continuing.

President Thein Sein declaring the state of emergency Sunday has warned of consequences if violence spreads.

THEIN SEIN, PRESIDENT OF MYANMAR (through translator): The stability and peace, the profits of democracy and the development of this country, which are only in transition right now, could be severely affected and much would be lost.

HANCOCKS: The Rohingya Muslim minority claims to have been long persecuted by the former military hunta which considered them to be illegal immigrants. Human rights groups are questioning whether deploying the military to quell this conflict is wise.

PHIL ROBERTSON, HUMAN RIGHTS WATCH: They have continued a policy of the military government of systematic discrimination against the Rohingya who are not considered citizens, who have their citizenship stripped from them in 1982 by a citizenship law.

HANCOCKS: The Myanmar government says it has opened six refugee camps for those displaced by the violence showing footage of its aid effort on state TV. But the United Nations says it is having to withdraw staff in the area because of the unstable situation.

The government's handling of this crisis will be watched very closely. After being praised for brokering ceasefires with other ethnic groups, this is seen as a crucial test for the new civilian regime.

Paula Hancocks, CNN, Seoul.

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MANN: Meanwhile, Myanmar's pro-democracy leader Aung San Suu Kyi has embarked on a trip to Europe, her first visit to the continent in more than two decades. You'll see the opposition leader finally accept her 1991 Nobel Peace Prize. The trip comes amid efforts by Myanmar's government to introduce reforms.

And for more on what the visit means we're joined in London by Way Hnin, political activists for the organization Burma Campaign UK.

Thanks so much for talking with us. Let me ask you first of all about her trip. Is it a symbolic thing, a victory lap, or does she have a real agenda do you think?

WAY HNIN, POLITICAL ACTIVIST, BURMA CAMPAIGN UK: It is a very (inaudible) if you can look at it is of political significance that she come here to the UK and that she can travel outside after 20 -- more than 20 years. And I'm sure that she will be using and she will be keeping this trip as a practical and she will be meeting lots of different people to talk about the real changes and democracy system to restore in the country...

MANN: How is she doing so far with those changes. Because it's a transition time for Myanmar. It's a very difficult time for the country, but it's a difficult time for her personally finally taking on the leadership that so many people have wanted to invest in her for so long.

HNIN: Yes. I think that now that she put a trust in the Burmese government, because now she's can travel and she knows that she will be able to go back in. So there is some level of trust that she put into the military backed government in Burma. But still there is -- you know, she always said there is still a long way to go because we haven't got a democratic system in the country and all the repressive laws still remain in place.

So she's got a lot of pressure on her shoulders. And also this trip will be very emotional for her coming back to home where her husband died and she couldn't be here. So this will be a trip mixed with emotions and lots of political agendas. And it will be a lot of pressure on her shoulders.

MANN: Are expectations enormously high? There are so many people in Myanmar, there are so many Burmese around the world who expect so much from her now.

HNIN: Yes. There are lots of expectations for her, but at the same time more people from international community don't really realize that, oh, you know, Aung San Suu Kyi is free and now that she can travel everything is fine. But the reality is there is real life, there are still political prisoners remain in prison and there are still lots of conflict in the ethnic area in northern part of Burma in Kachin area a woman has been raped.

So I think we need a realization from the international community so that they will keep helping her and Aung San Suu Kyi.

MANN: Let me jump in, though, and ask you about one of the political prisoners you mentioned. Because as you say a great many have still been held behind bars. One of them your father. Tell us what's happened.

HNIN: Yes. He is a former political prisoner. He was released in January. But he was arrested in 2007 for -- and sentenced for 65 years in prison. And he was released and paroled system. And he can be put back in prison at any time if the president of Burma decides to do so.

So those things still remain in place. And all the laws put my father in prison still remain in place. So that's why, you know, we've been telling to international community that we still need to help Aung San Suu Kyi, because we haven't got a democratic system in the country and it's still a long way to go. And, you know, yeah it's a very long way to go.

MANN: Way Hnin of Burma Campaign UK, thanks so much for talking with us.

HNIN: Thank you.

MANN: It has been a whirlwind trip for Aung San Suu Kyi when you think about where she started. But now she's literally on the road visiting five countries in 156 days. Her first stop Switzerland where on Thursday she's due to address the UN's international labor organization at its annual congress.

Next on the itinerary Norway where the pro-democracy leader will accept her 1991 Nobel Peace Prize and deliver a speech she's been waiting two decades to give.

Monday, U2 front man Bono will honor Suu Kyi in a special concert in Dublin. She's also expected to address the crowd there.

And she'll add a personal touch to her trip in the UK. On the 19th of June she'll spend her birthday in London with her family and the non to Oxford where she once studied to receive an honorary doctorate.

Then back to the capital to address Britain's parliament before returning to Yangon via France at the end of the month.

Still to come on Connect the World, the violent Mexican drug cartel that's alleged to have laundered millions of dollars through horses in America.

Plus, he rewarded fans by steering Chelsea to Champion's League glory. Now Roberto Di Matteo has been given his own reward. We'll tell you what.

And looks like the Duchess of Cambridge needs a new home. Good thing she can put up a tent. We'll explain coming up.

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MANN: Welcome to our viewers across Europe and around the world. I'm Jonathan Mann, and these are the latest world headlines from CNN.

Syrian state TV is broadcasting these pictures of Al-Haffa, a town recaptured by troops after eight straight days of shelling. The regime says it has "cleansed" Al-Haffa of terrorists -- that's its way of putting it. Rebels say they withdrew to spare civilian lives.

Dozens of people are dead and hundreds wounded after a series of bombings across Iraq today. Blasts mainly targeted Shiite pilgrims, many of them heading to Baghdad for a weekend religious celebration.

The chief executive officer of JPMorgan has apologized for his bank's $2 billion loss on high-risk trades. In a prepared testimony to the Senate Banking Committee, Jamie Dimon said it was "indefensible" that a hedging strategy in London turned into a multibillion-dollar loss.

UEFA has given Russia a suspended six-point deduction for the behavior of Russian fans during a 4-1 win against the Czech Republic. Points will be deducted from Euro 2016 qualifying rounds. UEFA took the action after fans threw fireworks onto the pitch and waved far-right banners.

Hard men and horses. We're learning just how much one Mexican drug cartel has managed to infiltrate US business. US officials say they've dismantled a major money laundering ring by the notoriously violent Zetas cartel using American race horses.

On Tuesday, 14 people were indicted on charges of using drug money to buy and breed horses in several US states. The indictment alleges that the breeding conspiracy raised millions of dollars. Our correspondent Rafael Romo is with us, now. And this is just a bizarre story.

RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR: That's right, Jon. This is a case that US officials say shows how Mexican criminal organizations have infiltrate legitimate US businesses for financial gain, as we will see in the next report.

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ROMO (voice-over): In public, Jose Trevino Morales was a legitimate and very successful horse breeder with stables in small, quiet communities in Oklahoma and Texas.

ROMO: But federal authorities say in reality, the 45-year-old was laundering drug money for his younger brother, Miguel Angel Trevino Morales, one of the leaders of a Mexican drug cartel. Agents raided ranches in Oklahoma and Texas Tuesday and arrested seven people, including the oldest of the Trevino brothers.

RAVONDA GOIN, NEIGHBOR: It's a shame. It's a shame for the horses. I hate it. I hate it for the horses, because they're the innocent victims. I'm trusting that law will take its place and do what's right.

ROMO: Seven other suspects remain at large, including 38-year-old Miguel Angel Trevino Morales, allegedly one of the leaders of the Los Zetas drug cartel, notorious for beheading and dismembering some of their victims.

Authorities also are looking for a third brother, 36-year-old Oscar Omar Trevino Morales. According to an indictment unsealed Tuesday, the brothers laundered drug money by using it to purchase American quarter horses and to pay for training and breeding them.

One of the horses they owned was the winner of the Dash for Cash at Lone Star Park racetrack in Grand Prairie, Texas, on October 24, 2009. Authorities say the brothers laundered at least $20 million since 2008. Neighbors say they didn't notice anything unusual at the ranches beyond the non-stop surveillance.

CHELSEA JOHNSON: Been driving around all the time. You constantly see lights coming down this way at all hours of the night.

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ROMO: And federal authorities have seized ranches and equipment at their properties, and also three bank accounts belonging to the brothers. And Jon, if they are convicted, they face up to 20 years in prison each.

MANN: OK, Rafael Romo, thanks very much.

Well, the Zetas' ability to infiltrate what's normally considered an elite business is raising concerns over the kinds of other business that might be affected by the cartel. Joining us now is Andrew Selee, director of the Woodrow Wilson Center's Mexico Institute. Thanks so much for being with us.

MANN: Are you surprised to see -- I mean, horse racing's the sport of kings. It's genteel, and these men -- I don't want to cast aspersions about their innocence or guilt, but if the state is to be believed, these men keep the company of people who chop people up and put them into bags.

SELEE: Yes, this is really the juxtaposition of the worst criminal element, because Miguel Trevino is believed to be the toughest of the Zeta leaders, the most vicious of the Zeta leaders in a very vicious group, with a very elite sport and a very genteel sport.

But I think it tells you that they've -- they're very sophisticated operations. They move into all sorts of areas that you wouldn't expect, and they're doing things -- we're used to drug traffickers owning bars and restaurants and maybe hotels, but why not horses, actually? It makes a lot of sense.

MANN: Why would it make sense to you? What's the common --

SELEE: A lot of rural background, it's something that is common in Mexico, and what they did is sort of naturally move up from owning horses on a farm to owning horses that race in the elite racing circuit.

So, as they got richer, they just moved up on the scale of what kind of ranching they did, and they moved up into the most elite bracket.

MANN: Big mean farm boys --

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SELEE: In addition --

MANN: -- but farm boys, nonetheless. Let me ask you, if you look beyond horse racing and, say, beyond the southern US states, are there any indications of how many different kinds of businesses they've penetrated, and how many different kinds of places? Are they just looking north, or are they looking south through Mexico as well?

SELEE: We think they're probably looking all over. They probably have businesses all over the world. When we talk about $20 million, which is what the authorities have said that they probably laundered through this operation -- it could be much more, of course -- but that's a drop in the bucket in what is probably a $6 billion to $9 billion operation a year in drug trafficking from Mexico. The Zetas --

(CROSSTALK)

MANN: So, why did they bother?

SELEE: -- are a piece of that.

MANN: Why would they bother doing this kind of business? It's chump change to them.

SELEE: It's chump change, but you have lots of different things which are chump change. There probably are lots of businesses like this. They also sometimes launder money through the financial system, sometimes they bring it back in bulk cash. They probably have business around the world. You add it all up, and it does make a difference.

MANN: Now, let me ask you about these men themselves. Once again, I don't want to talk about the people who have been accused in this case, but when we talk about the Zetas, we're talking about people who, just last month, were blamed for a massacre with -- I think it was 89 chopped up people found on the side of a highway, and proudly announced with graffiti on the wall, 100 percent Zeta. They take credit for horrendous crimes. Why are these guys such nasty characters?

SELEE: The Zetas -- the world of drug trafficking brings out the worst in people, obviously, in general. But even in that world, the Zetas are known as being the most brutal group. They really have perfected the art of going after -- if you want to call it an art -- of really trying to terrify their enemies with brutality.

And most drug trafficking organizations and most transnational organized crime groups are not that violent. They are -- they certainly kill people when they want to, but they're not as graphic about it.

The Zetas have really gone out of their way to try and make an example when they kill people. They've been implicated in the killings in a casino fire, in this incident where they dumped people on the road, and in many other killings. The killing of migrants, actually, traveling north from Central America through Mexico. And this is a group that really tries to terrify its enemies by doing graphic, vicious killings.

MANN: Is it working? Are Mexican authorities managing to get any kind of control over them?

SELEE: It's worked in one way, which is that they have expanded as a group. But at the same time they've expanded their reach, and they really have become an international group -- the Zetas started off as a much smaller group, they've become much bigger -- there's a lot of signs that the Mexican government has actually been able to break down some of their command and control.

So, they've lost a lot of their mid-level leaders. This blow is probably going to hurt them in some ways, as well. And they are not as coherent a group as they used to be. So yes, they're bigger than they once were, but the Mexican government actually has succeeded in trying to limit some of their ability to really control their operations.

And it looks like some of the Zeta operations around Mexico and in Central America may no longer respond as directly to central command as they once did. And that may be the first step in breaking down this organization, or at least limiting its violence.

MANN: So, are we going to see more of them, more of their money trying to find new places to call home, like the horse racing business in the United States or other presumably legitimate businesses?

SELEE: I think we will. And money laundering is -- I think you're going to see a huge effort by the US government and by the Mexican government.

We shouldn't forget, by the way, all the money that goes into these drug trafficking operations, almost all of it comes from US consumers of narcotics. So, this money is mostly on the US side, and they're trying to get it back to Mexico.

Money laundering is very sophisticated. It's very hard to prosecute. But the US government has said that they're going to get much more active at going after the US side operations of these organizations.

And I think they're staring to apply some of the techniques we've seen against terrorist organizations, some of the anti-money laundering techniques that were used against al Qaeda and others to groups like the Zetas. And I think we're going to see a lot more seizures, a lot more arrests based on the money laundering operations.

MANN: Andrew Selee of the Woodrow Wilson Institute -- Mexico Institute. Thanks so much for talking with us.

SELEE: Good to be with you.

MANN: On a very different note, Euro 2012, let's talk about that for a while. It's kicking into gear. The Group of Death came to life on Wednesday. All the details from our crew in Eastern Europe just ahead.

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MANN: Welcome back. We just love the name, the Group of Death. Well, the Group of Death at Euro 2012 has lived up to that name as 2010 world cup finalists the Netherlands are actually on the brink of elimination. We go to Pedro Pinto in Warsaw, Poland, who has more. It doesn't look good, does it?

PEDRO PINTO, CNN SPORTS CORRESPONDENT: No, it doesn't for the Dutch. We have to say that, Jonathan. What a day it was, day six at the Euro and, finally, we're leading with the football, not with the controversy.

Eight goals in two games in a match which ended just a few minutes ago in Kharkiv. The Netherlands lost to Germany 2-1, the Germans now just a small step away from the round of 16. They got two goals from Mario Gomez.

The Dutch pulled one back through Robin van Persie in the second half, but it was too little, too late for the Dutch side, who are now staring elimination in the face.

Earlier on Wednesday, it was Portugal notching a dramatic victory over Denmark in Lviv. Silvestre Varela with a goal in the 87th minute, giving Portugal their first 3 points of the competition.

So, as it stands now, we've got Germany on 6 points, Denmark and Portugal on 3, and Holland on zero heading into the final round of fixtures. Should be an exciting one as well, Jonathan.

MANN: We ask you this every time, and it's a pity we even do, but good to see excitement on the field, given how much ugliness there has been elsewhere.

PINTO: Absolutely. And today, everything was calm here in Warsaw in the aftermath of the clashes which preceded the match between Poland and Russia here at the National Stadium behind me.

It was a busy day for UEFA, still. They've started to investigate everything that happened during that clash between Poland and Russia.

But they handed out a huge fine to the Russian football union, 120,000 euros and also a suspended penalty of six points for the Euro 2016 qualifiers, and this pertained to the unruly behavior of their fans during their first game of the tournament against the Czech Republic, not because of what happened last night or yesterday afternoon.

It could get worse for Russia, of course, if UEFA investigate these incidents and they also find that the Russian fans were guilty of improper behavior, then they could hand out more fines and they could activate that six-point penalty.

One final note is that UEFA also condemned the violence before the Poland-Russia match. They released a statement saying that they were very, very disappointed with what happened.

It's been the reaction all around here on the ground in Warsaw. The sports minister said she was disgusted and ashamed. A spokesperson for the co-hosts, Poland, also told me earlier today, Jonathan, that he did feel very sad and disappointed about seeing Polish hooligans acting the way they did before that match.

MANN: We can't get away from it. Pedro Pinto in Warsaw. Thanks very much.

Let's turn to club football, now. Different kind of news. European champions Chelsea have decided on a permanent coach. And we're going to be joined by Christina MacFarlane. I think she's out there somewhere. Christina? There you are. Pretty popular choice.

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CHRISTINA MACFARLANE, CNN SPORTS CORRESPONDENT: Yes, very much so, Jonathan. The Roberto di Matteo has been announced as two-year contracts. And just hours ago, the club made this statement.

They said that Roberto's quality was clear to see, the manner in which he works with the club and the success that followed made him the clear choice for this position.

And let's just remind ourselves, Jonathan, of --

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MACFARLANE: -- that success as the interim manager in March. He then went on to steer --

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MACFARLANE: -- and guide this club to an FA Cup trophy. And for the first time in the club's history, a Champions League crown. He conceded only 3 defeats in 21 games, which is quite a remarkable statistic for any manager in that situation.

And it's clear that Roberto di Matteo has obviously very much earned this on his own merit. And of course, it's an extremely popular decision with the Chelsea fans.

MANN: Christina MacFarlane, thanks very much.

We'll have much more on Chelsea's new old man at the top and the latest from Euro 2012 coming up on "World Sport" in about 35 minutes' time.

You're watching CNN. Before we go, let me just tell you about word just in from the Moody's financial service. Moody's investor service says it has downrated Spain's government bonds. Spain's debt rating is downgraded, Moody's is telling us, from A3 to BAA3.

Moody's is downgrading Spain for a variety of reasons. It's going to be getting, of course, 100 billion euros in banking help from the European Union. It says Spain is having trouble going to the financial markets to raise the money it needs on its own.

And finally, Spain's economy is continuing to show signs of weakness. It's just trouble all over, and so Moody's tells us that Spain's government bond rating has been downgraded to BAA3 from A3. More bad news for Madrid.

You're watching CONNECT THE WORLD. When we come back, the front line in the battle for job creation. Our Eye on Georgia series continues with a look at how Georgia's beefing up its defense industry.

And stand back. The Duke and Duchess of Cambridge have got a weapon in their hands --

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MANN: Stay out of the way. The whole story after this break.

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MANN: Riding the wave of an economic boom. This is the seaside town of Batumi in Georgia, undergoing a huge makeover thanks to a huge does of investment. It's just one of the stories we've brought you this week as part of our Eye on Georgia series. A country once described as one of the darkest in the world now looking forward to a bright future.

It's not just tourism that's boosting Georgia's economy. The Black Sea country is busy building up its military arsenal. Diana Magnay went to a practice range outside the capital, Tbilisi, to have a look at the country's firepower.

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DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): The Lazika tank holds pride of place in Georgia's military arsenal because these tanks it makes itself.

Developing its own range of military hardware is something new for Georgia, and they're keen to show it off. This is a training drill put on especially for the cameras.

BACHANA AKHALAIA, GEORGIAN DEFENSE MINISTER (through translator): Before 2008, we were using Soviet types of weapon, and that's what we had to supply our army with. Now, we're in the process of transforming to meet NATO standards and to have just our weapons and to wipe out any dependence on Russian weapons.

MAGNAY: But there's more to it than that. After the 2008 war with Russia, Georgia found itself shut out of the international arms market. Countries it had bought from in the past were not prepared to cross Moscow by selling arms to its tiny Caucasian neighbor.

NATE HUGHES, DIRECTOR OF TACTICAL INTELLIGENCE, STRATFOR: What Russia is basically doing is making it clear that there will be consequences for a sale. It's just basically a cost-benefit calculation.

MAGNAY: Georgia has reason to feel insecure, under threat from its former Soviet task master. Relations with the breakaway regions of Abkhazia and South Ossetia are fragile at best. Georgia considers them Russian-occupied territories. Relations with Moscow have frozen since the 2008 conflict.

AKHALAIA (through translator): Russian troops are far away, but that doesn't mean there's no danger. The EU mission in the administrative regions is reliable, but they can't go into occupied territories or monitor what's happening there.

MAGNAY: So, in 2010, Georgia started producing its own tanks, armored vehicles, these unmanned aerial systems, wheeled out on display for us at a military training ground just outside Tbilisi. The bulk of the army's equipment is still foreign in origin, but the balance has changed.

MAGNAY (on camera): It's still early days for Georgia's defense industry, but it's already creating hundreds of jobs in this country. And once they've managed to satisfy the needs of Georgia's armed forces, then they're hoping to compete internationally with some of the world's biggest weapon-producing countries.

MAGNAY (voice-over): Rezo Charbadze is the director at the Delta factory where all the manufacturing takes place.

REZO CHARBADZE, HEAD OF SCIENTIFIC RESEARCH, DELTA MANUFACTURING (through translator): We've had quite a lot of interest from other arms manufacturers for our new range of products, and many offers of cooperation.

MAGNAY: Georgia says it has the expertise to compete, even if the industry did start from scratch just two years ago. But experts say that's wishful thinking.

HUGHES: It's the economics that really don't add up, because the Georgian state is only going to buy a very limited quantity, and pretty much anything Georgia might build for itself, the international marketplace is already flush with. So, their prospects for competing competitively on the export market are pretty limited.

MAGNAY: For now, Georgia's defense industry is more flash than fire. Its ultimate goal to protect its strategic interests is NATO membership. But as long as their security challenge is unresolved along its borders with Russia, NATO is holding back. The possibility of entry one day still supposedly on the cards, but an actual entry date not even a matter of discussion.

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MAGNAY: Diana Magnay, CNN, Tbilisi.

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MANN: And finally, in tonight's Parting Shots, the Duchess of Cambridge has tried her hands at many things over the last year: baking, painting, even hockey. Prince William's wife can now add another skill to that list of royal accomplishments. Our Royal Correspondent Max Foster has more.

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MAX FOSTER, CNN ROYAL CORRESPONDENT: One of Prince William's key interests is protecting public recreational spaces, like this one in Nottingham in the English midlands. So, he and his wife joined forces with the queen on this particular leg of her UK Diamond Jubilee tour.

FOSTER (voice-over): They had a bit of a chaotic start as Prince William was surrounded by crowds as he tried to start a race for schoolchildren. But the queen and the duchess looked on with some amusement. Clearly, their relationship is getting stronger all the time.

HRH PRINCE WILLIAM, DUKE OF CAMBRIDGE: How grateful we all are to you for the extraordinary devotion and love you have shown to the people of this country and the Commonwealth.

FOSTER: The queen then departed and left the youngsters to take in all the activities that had been laid on in honor of the royals. The duchess, a volunteer scout, had a chance to show off her skills.

And the couple had a chance to show off their sporting prowess and their competitive sides. Prince William throwing a foam javelin.

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FOSTER: And anything he can do, the duchess can do better.

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FOSTER (on camera): They're both Olympic ambassadors. This event marked a transition, really, between the big two UK events this year, the Diamond Jubilee celebrations and the London 2012 Olympics, just around the corner now.

Max Foster, CNN, Nottingham in central England.

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MANN: I think that's the biggest smile we've seen on the face of Her Majesty the Queen in quite some time. And, well, the young couple makes the rest of us smile.

I'm Jonathan Mann, and this has been CONNECT THE WORLD. Thanks for being with us. The world headlines are coming up next -- after this short break. I'm Jonathan Mann, you're watching CNN.